The Autumn Budget has made some significant revisions to the definition of “personal company” which has serious consequences for investors wishing to take advantage of Entrepreneurs’ Relief when making gains from the disposal of shares or securities.
The chancellor’s Autumn Budget contained plenty of good news for businesses, encouraging investment as the country heads towards Brexit; however, the eligibility criteria of Entrepreneurs’ Relief was tightened.
With the revisions, to now qualify for entrepreneurs’ relief for any gains made from the disposal of shares or securities, the issuer of the shares must be the taxpayer’s personal company. However, the criteria as to what constitutes a personal company has changed and will affect any disposals made from 29 October 2018.
To be eligible for Entrepreneurs’ Relief, the taxpayer needs to satisfy the following:
Who is affected?If you have your own company and hold ordinary shares with full voting rights and rights to the company’s assets on a winding-up, it is unlikely you will be affected by the change.
Further changesA further change to Entrepreneurs’ Relief is to take immediate effect for all disposals made from 6 April 2019.
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